P owned 13 rental properties. In 1983, P purchased a new BMW which she used to inspect and maintain said properties. P claimed entitlement to an investment tax credit with respect to her acquisition of the BMW. Held, because the BMW was used in connection with the furnishing of lodging, it is not sec. 38 property; hence, P is not entitled to the claimed investment tax credit.
Dorothy LaPoint, pro se.
Ann Murphy, for the respondent.
Jacobs, Judge.
JACOBS
*733 Respondent determined a deficiency of $ 8,214.58 in petitioner's 1983 income tax.
After concessions, the issues for decision are: (1) The characterization of certain renovations which petitioner made to 3 of her 13 rental properties (i.e., whether said renovations constituted repairs or capital improvements); (2) whether petitioner is entitled to an investment tax credit with respect to an automobile used in connection with her *734 rental activities; and (3) whether petitioner is liable for the alternative minimum tax under section 55. *51 FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of facts and accompanying exhibits are incorporated herein by this reference.
Petitioner resided in Castro Valley, California, at the time she filed her petition. She was employed by the Department of Housing and Urban Development in its San Francisco office.
Petitioner owned 13 rental properties located in the Bay area. She made the following renovations to three of these properties in 1983:
Tax credits, like deductions, are a matter of legislative *737 grace. Segel v. Commissioner, 89 T.C. 816">89 T.C. 816, 842 (1987). Petitioner used her BMW to inspect and maintain her rental properties. The rental properties were lodging facilities. Sec. 1.48-1(h)(1)(i), Income Tax Regs.
The statutory language "Property * * * used * * * in connection with the furnishing of lodging" is more encompassing than property used or available for use by a tenant; it includes property used in connection with the operations of rental property, such as an automobile used by a landlord to inspect and repair rental property. Accordingly, in the instant case, the BMW is not*57 section 38 property; hence, petitioner is not entitled to the claimed investment tax credit.
Finally, we decide whether petitioner is liable for the alternative minimum tax under section 55. In 1983, petitioner recognized a net long-term capital gain as a result of the sale of the La Porte and Dixon Street properties. The net long-term capital gain entitled petitioner to take the 60-percent deduction for capital gains provided in section 1202.
Section 55 imposes an alternative minimum tax on noncorporate taxpayers to the extent that 20 percent of the excess of the taxpayer's "alternative minimum taxable income" over an exemption amount exceeds the taxpayer's regular tax. In general, a taxpayer's "alternative minimum taxable income" is calculated using the taxpayer's adjusted gross income as a base figure. Sec. 55(b). Items of tax preference under section 57 are then added to the base figure. Sec. 55(b)(2). In the case of a noncorporate taxpayer (such as petitioner), the amount of the section 1202 net capital gain deduction is a tax preference item. Sec. 57(a)(9).
In the instant case, to the extent that 20 percent of the excess of petitioner's alternative minimum taxable income*58 over her exemption amount exceeds her regular tax, petitioner will be liable for the alternative minimum tax. The precise amount of petitioner's liability under section 55, if any, can be determined in the parties' Rule 155 computation.
To reflect the foregoing and the concessions of the parties,
Decision will be entered under Rule 155.
Footnotes
1. All section references are to the Internal Revenue Code of 1954 as amended and in effect during the tax year in issue.↩
2. Respondent disallowed deductions for "replacements" in the aggregate amount of $ 8,611, whereas the actual costs for the renovations total $ 8,638. No explanation was given as to the $ 27 discrepancy.↩
3. That draft contained language identical to that which was eventually enacted in the Revenue Act of 1962. See Revenue Act of 1961, sec. 2(b), Discussion Draft 12 (J. Comm. Print 1961).↩